USD/JPY looks to have fallen into a limbo of sorts between 115.40 on the downside and 116.00. Bids from Japanese and a bevy of other players remains down at 115.40 and below, and look to support the pair as the week progresses.
Buyers include Japanese importers for month-end settlements (including oil importers), institutional investors, private and semi-official, and a host of overseas funds to are looking to cover up short USD positions ahead of their fiscal year-ends. Topside resistance remains towards 116.00 where specs are ready to sell some more on expectations of further USD weakness. USD weakness looks to be greater in other pairs than USD/JPY, and the reasoning is that USD/JPY has to eventually play catch-up.
That said, JPY crosses remain in demand on carry trade considerations. This is especially so in EUR/JPY which looks to have found a base of sorts in the high-151 area if not around 152.00. This cross looks to be benefiting still from central bank diversification flows, real and expected. USD/JPY currently trades 115.68/70, EUR/JPY 152.03/07.
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